Myrl Jeffcoat

Ah, February 14^th - Valentine’s Day. Each year, I have the feeling there is a little more in the air than benevolent pure love.

This ‘other' feeling isn't coming from the warm caring feelings of one near and dear with the aid of Cupid's bow. Instead it arrives with the specter of Tax Forms from our not so ambivalent Internal Revenue Service.

Each year we Americans appear to pay our government more in taxes and come away with less showing from it at the personal level, and each year we attempt to seek out just one more deduction to soften the barb.

It is at this time we realize how much we cherish owning our homes and other real estate holdings as real lifesavers in taxes. Mortgage interest is still very much deductible as are property taxes. If you own rental property, you may not only deduct these items, but depreciation, insurance and repairs as well.

If you are holding a large equity in your present home, chances are your deduction for mortgage interest is very low or virtually non-existent. Have you ever considered re-financing your home in order to pull out equity to buy a rental property; or perhaps you've wondered about selling and purchasing a more upscale home? Chances are either of these moves would dramatically improve your tax situation.

If you are considering purchasing a rental property, or if a larger home is in your dream for the future, please contact me. I look forward to hearing from you!

In 2010, Zillow.com reported 31% of California’s homeowners were underwater. In other words, they owed more on their mortgages than the current value of their homes. In present day, February 2012, the percentages have continued to increase, with some cities and areas of California reporting percentages considerably higher.

Two years ago, Kurtis Ming of Sacramento's Channel 13/CW31 (CBS), showcased the dilemma many homeowners experience, in a segment titled, "Giving Up On Your Home."

The expose’ asked the important question, if you are underwater in your house, and even if you can afford it, should you stay on course - or walk away?

Ming’s article showcased an El Dorado County couple, who was able to afford their home, acquired in 2005, but had decided to walk away. They saw it as a business decision.

Increasingly, real estate professionals are hearing from folks, who decline to believe they have a moral obligation to pay mortgages. These individuals have seen a double standard for Main Street and Wall Street. Main Street has historically felt ethically bound to contractual promises, but Wall Street often fails to be bound by ethics, when seeking to minimize losses.

When Kurtis Ming first aired his story in 2010, the California Bankers Association released the following response:

"During the past few years as foreclosures have increased we have seen historic efforts by the government, financial services industry and consumer groups to help millions of borrowers stay in their homes. These foreclosure relief/mortgage modification programs are designed to help borrowers who have a willingness to stay in their home, yet are no longer able to make their monthly mortgage payment. These programs were not designed to help those borrowers who have the resources to pay their mortgage, yet find themselves owing more than the house is worth. Throughout, concerns have been expressed over the moral hazard resulting from efforts to keep borrowers in their homes. Establishing residential mortgage assistance programs is intended to create a safety net for borrowers and minimize the adverse consequences of foreclosures to the overall economy.

With respect to what you refer to as "responsible" borrowers, it is expected that those borrowers demonstrating an ability to make their payment would continue to do so according to the terms of the loan documents they signed. The bank released funds based on that agreement and a failure to honor that agreement jeopardizes shareholders whose investment is adversely affected when loans are not repaid. In general, principal reductions may be considered by banks on a case by case basis, where a number of factors are taken into consideration including a borrower's ability to pay." --Beth Mills, California Bankers Association

So here’s the question as we sit here today. For those of you who have eyed the housing landscape from the trenches - What are your feelings and thoughts concerning Kurtis Ming's report written in February 2010? Do you see any meaningful change in the trenches – or do things seem much the same!

Click the following link for the complete Kurtis Ming report titled, "Giving Up On Your Home" It is very worth reading! It could just as easily been written in February 2012, as February 2010.

This was a busy Friday morning for me. I needed to be at Kaiser Permanente before 7:30 am, for routine lab work. I couldn’t help smiling when I read a sign inside Kaiser’s lobby, which pointed to an “Assertive Training” class up on the 2^nd floor. I didn’t know they taught things like that, and wondered if “Anger Management” classes were offered on the same floor:-)

After the lab vampire had her way with my arm, I headed on to BelAir, my favorite grocery store. What they say about shopping on an empty stomach is true. Because I hadn’t eaten since last evening, I grabbed a banana from the grocery bag, to eat in the car on the way home. I kept breakfast light, because I knew I would be enjoying a treat - either Thai or Indian food for lunch.

Sunriver Shopping Center has two great little restaurants. As I cruised by Thai Jasmine, which I have blogged about before, I couldn’t help notice a new sign to the right of the door. “We Serve Vegetarians,” it read. “Gee, I wonder what “vegetarians” taste like,” I chuckled to myself. This was a morning of playing word games in my head!

At the opposite end of the Sunriver Shopping Center from Thai Jasmine, is Namaste Nepal. This restaurant enjoys space formerly held by Udupi Café.

Early last month, I had a visit from Silvia, a longtime friend. My friend had gone through several life challenges over the past several years, but Silvia is a survivor, and is still strongly standing. There had been a recent divorce, coupled with the loss of a high paying job. But she was excited that she had found another position in her same field of software development. However, Silvia is now living in a single income household, and her new job is paying considerably less than her previous position.

Silvia must come to grips with the reality of a new budget. In actuality, there had been no budget previously, so this is a new experience for her. While she laid checkbook, credit card statements and her life, open at my kitchen table, the experience was both cathartic and enlightening for Silvia, as spending history and habits were relived.

Among Silvia’s credit card statements, I noticed a monthly $44.00 charge for a health club, she told me she had belonged to for over 5 years, but hadn’t been to for well over a year. I had to ask, “Are you going to get with their program once again?” No, she had purchased a bicycle, and was doing a lot of her exercise free along the American River Bikeway. It was time to cancel the gym membership. Health Club savings per month for Silvia - $44.00

We talked about other areas in Silvia's living and spending habits, where savings might be explored and tweaked. In addition to the $114.00 monthly savings from her Starbucks and health club expenditures, we saw the possibility of significant enhancement of her budget fitness and wellbeing.

Although, I’m not a financial counselor, it doesn’t take rocket science to sit down with your check book and credit card statements, to see a pattern, of behavior, and expenses, which can often be easily changed. And in so doing create significant savings in a personal budget. During these difficult economic times, it can be empowering to explore these more fully, and implement changes to using money more wisely. What Silvia discovered was she truly did not need to give up her previous lifestyle as dramatically as she had originally thought! It was really about reassessing where she had been, and where she needed to be going. For that to happen it also required an honest assessment of where financially she currently was!

There are a number of issues, which make this current real estate market different from any previous housing cycles I have witnessed during my 30 years as a Realtor. One of the more primary of these is the number of homes on the market, which require tender loving care. In other words, they are fixers. Because the recession has gone deeper than previous down cycles of the past 60 years, and unemployment has been significant, many homeowners simply haven’t had the funds needed to handle home maintenance issues in a manner they normally would. And still other properties in need of repair, are vacant and bankowned.

But as every cloud is supposedly gifted a silver lining, so goes this real estate marketplace, with the saturation of properties needing care. If you are a homebuyer, with handy skills in home repair, then you have a window of opportunity to sweat some real equity in any home you may purchase.

However, consideration needs to be given to certain things, prior to purchasing, which can safeguard any investment of money, time and effort.

(1) As in all home purchases, it is all about location, location, and location. Consider striking up a conversation with neighbors, who often provide a history of the neighborhood and any problems or nuisances, which may exist. Neighbors can also enlighten about amenities in the community, the weather in the area, school quality, etc. In addition to general neighborhood and community information, close neighbors of a property can often provide a good background on the specific property you are interested in.

(2) Make certain to query your real estate professional about real estate value trends in the immediate area of the home. Consider asking your agent to provide a CMA of the property.

(3) Are jobs, employment and business, readily available, and growing in the community, or are they leaving the area?

(4) Once you have informed yourself about the location and history of the property, it is time to consider what inspections ought to be performed to satisfy any questions about structural condition of the home. Many real estate professionals suggest home buyers procure a termite and home inspection, as well as sometimes recommending having a roof inspection performed. There are other available inspections, which may be considered. Since most bank-owned properties today are sold "as is" without disclosure, it is vitally important to have inspections by qualified individuals to appraise you of any damage, and potential cost in repairs to bring the home up to standard.

If you are in the Greater Sacramento Region, and thoughts of purchasing a "fixer-upper" home appeals to you, please contact me to assist you in understanding potential savings and opportunity with such an investment.

I look forward to hearing from you!